Agreements Between Grain and Stock Producers Could Be Beneficial

Source: Saskatchewan Agriculture and Food

It seems the livestock sector is enjoying renewed vigour these days, but a little caution is always in order.

One of the ways to reduce risks for both grain and livestock producers is to enter into agreements that are mutually beneficial, according to Sarah Sommerfeld, an Agri-Business Development Intern with Saskatchewan Agriculture and Food.

The opening of the border to the United States for cattle under 30 months of age, and the reopening of the Japanese border to cattle less than 20 months of age, bode well for the industry. Producers have been and are expanding operations, and consequently they are requiring access to more forage resources.

“But expenses within the agriculture industry continue to increase, and producers are continually trying to keep costs in check," explains Sommerfeld. "Livestock operators are no exception; therefore, purchasing large acres of grazing land may not be financially viable or attractive for them. A solution may be the creation of agreements between the owners of cultivated land—grain producers—and livestock producers.”

Typically, these sorts of agreements have not been very common, explains Sommerfeld, but more producers—of both livestock and grain—are slowly realizing the potential value of working together in a mutually beneficial partnership.

“For example," she elaborates, "a grain producer could contract with a livestock producer to grow an annual forage crop for swath grazing or baled green feed. An annual or perennial crop may also be grown for silage. At the start of the growing season, the intent may be to produce a crop for human consumption, but growing conditions may down-grade the crop to livestock feed. Provision of a fence and water supply could be the responsibility of either the land owner or the livestock producer.”

Sommerfeld suggests that establishing these agreements presents the opportunity for grain producers to invest in livestock without extra expenses, labour or management.

“Producers might feel uneasy entering into an agreement that is not typical for their sector, whether it is livestock or grain production that is being considered," she says, "but as agriculture continues to evolve, operators must be willing to evolve along with it and to think progressively. It could mean the grain producer puts up a fence at his/her own cost or develops a water source, and recovers those expenses through the rent he or she charges the livestock producer.”

These agreements take some of the risk off the livestock producer, but they also reduce the grain producer’s risks because the grain producer has a guaranteed price and market for the crop.

“If the two parties can work together, and the grain farmer produces a crop that the livestock can use, then it is a win-win situation,” concludes Sommerfeld.

For more information, contact:

Sarah Sommerfeld, BSA
Agri-Business Development Intern
Saskatchewan Agriculture and Food
(306) 867-5557